The Autumn Statement 2015

Our Chief Economist, David Fenton, offers commentary on today's Autumn Statement and what it means for your money.

The Chancellor delivered a financial double-header this afternoon, presenting both the Autumn Statement and the Spending Review to Parliament.  The so-called U-turn on tax credits seems to be grabbing most of the headlines but, overall, "takeaways" exceeded "giveaways". Our Chief Economist David Fenton offers his take on The Chancellor's 2015 autumn statement and spending review.

Economic mood music unchanged. Forecasts for the economy underpin all the projections for tax & spend. And they didn't change much. The recovery is expected to continue, employment levels are projected to rise, and house price inflation levels off at about 5% a year. As a result, the outlook for the public finances is largely the same. Specifically, the deficit is set to be eliminated by 2019-20.

U-turn on tax credits the main "giveaway". The Chancellor announced that he would abandon controversial plans to cut tax credits. This will cost the Treasury more than £3 billion in 2016-17, though the effect gradually dissipates, because tax credits are being phased out as the government introduces the Universal Credit. So, in reality, it was more of a lane change than a U-turn.

Apprenticeship Levy the main "takeaway". This policy was announced in the Summer Budget, but we received the details today. The levy will be set at a rate of 0.5% of an employer's payroll, with an allowance of £15,000. This means that the levy will only be paid on any paybill in excess of £3 million. All told, the levy is expected to raise about £3 billion a year. It will be used to fund 3 million apprenticeships, with a view to developing a better-skilled labour force.

Higher stamp duty for additional homes. The Chancellor announced that people buying additional properties - second homes or buy-to-let investments - will have to pay an additional 3% in stamp duty. The Treasury believes this will raise about £750 million a year, and is part of a "five point plan" to encourage home ownership. The government also intends to deliver 400,000 affordable homes by 2020-21; half of these will be "Starter Homes" sold at a 20% discount compared to market value to young first time buyers. And there will be a new London Help To Buy scheme.

Departmental spending: the axeman cometh. The Spending Review revealed Departmental settlements for the next five years. We knew big cuts were coming; the question was where the axe would fall. Business, Innovation and Skills stands out as a large department that will see a large reduction in day-to-day spending (down 17% over the next five years, in inflation-adjusted terms), though Local Government Spending will also feel the pinch. Budgets for capital spending are much smaller, but were generally protected. For example, Transport spending will rise from £6 billion to £12 billion, with an increase in road and rail investment.

So, what does this mean for you and your money?

As David mentions, the big news has been the supposed u-turn on cuts to tax credits. The future Universal Credit will still eventually replace the current tax credit system but now the change will be more gradual but this may still see families and individuals worse off in the long run.

Universal Credit currently only affects you if you are newly unemployed and in certain areas of the country. The Universal Credit will eventually become a single monthly payment whether you are employed or not and will replace Income-based Jobseeker's Allowance, Income-related Employment and Support Allowance, Income Support, Child Tax Credit, Working Tax Credit and Housing Benefit.

Key announcements for:  


There will be further support for childcare costs with 30 hours of free childcare for the first two children aged between three and four years old 2017 in England, but only to parents working more than 16 hours and who each earn £100,000 or less. Many parents already get a free 15 hours of childcare for three and four-year-olds.


A 1% cap on public sector wages will remain in place for the next four years as previously announced. The Living Wage, the new approach to the minimum wage, will be paid to those in work aged 25 and over from April 2016 at £7.20 an hour and reaching £9 an hour by 2020.

Students and Graduates

Student grants for families  with household incomes of £25,000 or less are to be scrapped in England and Wales. From the 2016-17 academic year, the grants will be replaced with loans, meaning students will have to pay the money back. The Student Maintenance Loan will rise to £8,200 a year for those who are studying away from home, outside London.

Graduates who started University on or after September 2012 in England and Wales and earning £21,000 and under will benefit from having their student loan repayment threshold frozen until April 2021, rather than rising in line with inflation. Freezing the threshold could make repayments more expensive.

Your Personal Allowance

A basic-rate taxpayer in 2016-17 could be up to £80 better off as the "personal allowance" - the threshold at which most taxpayers start paying income tax - will increase from £10,600 to £11,000, a £400 increase.

Cars and fuel

Fuel duty will be frozen for another year and those buying a new car will be subject to a banded new vehicle excise duty (VED) charge. There will be three bands: zero, standard and premium for which the standard cost will be £140. Existing cars will be unaffected and the charge will be used to fund road maintenance.


The total amount of benefits that unemployed families can receive will be reduced from £26,000 to £20,000, or £23,000 in London. Those on higher incomes living in social housing will be forced to pay the market rate for their homes. That applies to those earning above £40,000 in London and £30,000 elsewhere in Britain. Longer term plans include cutting rent payments for social housing by 1pc per year for each of the next four years.   



Do your banking wherever you are with secure online banking services.

Download our app



Bank online 24/7 using our Internet Banking website or our mobile app.

Internet Banking



Bank over the phone 24/7 using our automated service - call 03459 758 758.

Telephone Banking



Find your nearest branch or cash machine using our Branch Locator tool.

Find branches